Gaelic Industries Inc. is an athletic footware company that began operations on
ID: 2424118 • Letter: G
Question
Gaelic Industries Inc. is an athletic footware company that began operations on January 1, 2016. The following transactions relate to debt investments acquired by Gaelic Industries Inc., which has a fiscal year ending on December 31:
2016
Record these transactions on page 11
2017
Required:
2016
May 1 Purchased $75,000 of Avery Co. 7%, 15-year bonds at their face amount plus accrued interest of $875. The bonds pay interest semiannually on March 1 and September 1. 16 Purchased $60,000 of Clawhammer 6%, 10-year bonds at their face amount plus accrued interest of $150. The bonds pay interest semiannually on May 1 and November 1. Sept. 1 Received semiannual interest on the Avery Co. bonds. 30 Sold $30,000 of Avery Co. bonds at 98 plus accrued interest of $175. Nov. 1 Received semiannual interest on the Clawhammer bonds. Dec. 31 Accrued $1,050 interest on the Avery Co. bonds. 31 Accrued $600 interest on the Clawhammer bonds.Explanation / Answer
1./
2016
MAY 1
7% 15 YEAR BOND A/C..................................DR $75000
ACCURED INTEREST A/C...............................DR $875
TO CASH A/C $75875
MAY 16
6% 10 YEARS BOND A/C........................................DR $60000
ACCURED INTEREST A/C.......................................DR $150
TO CASH A/C $60150
SEPT 1
CASH A/C..........................................DR $2625
TO INTEREST INCOME A/C $1750
TO ACCURED INTEREST $875
SEPT 30
CASH A/C....................................................DR $29575
TO 7% 15 YEAR BOND $29400
TO ACCURED INTEREST $175
NOV 1
CASH A/C.......................................................DR $1800
TO INTEREST INCOME $1650
TO ACCURED INTEREST $150
DEC 31
ACCURED INTEREST A/C............................................DR $1050
TO INTEREST INCOME A/C $1050
DEC 31
ACCURED INTEREST A/C..............................................DR $600
TO INTEREST INCOME $600
2017
MAR 1
CASH A/C............................................DR $1575
TO INTEREST INCOME A/C $525
TO ACCURED INTEREST $1050
MAY 1
CASH A/C............................................DR $1800
TO INTEREST INCOME A/C $1200
TO ACCURED INTEREST $600
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2./
IF THE BOND PORTFOLIO IS CLASSIFIED AS AVAILABLE FOR SALE THAN THE PORTFOLIO WILL BE RECORDED OR DISCLOSED UNDER THE CURRENT ASSET OR CURRENT INVESTMENT RATHER THAN LONG TERM INVESTMENT.